MAR-2 OT:RR:NC:N1:105
Daniel Kiselbach
Miller Thomson LLP
400 – 725 Granville Street
P.O. Box 10325
Vancouver, BC V7Y 1G5
RE: The country of origin, marking and North American Free Trade Agreement (NAFTA) eligibility of projector screens
Dear Mr. Kiselbach:
This is in response to your letter dated January 31, 2020 requesting a ruling on the country of origin, marking and eligibility of the North American Free Trade Agreement (NAFTA).
The merchandise under consideration is identified as projection screens including models High White 2.0 (3DHW 2.0 SM), Matte White 1.0 Gain (N10SM), White 1.8 Gains (N18SM) and 3D Silver 2.5 Gain (3D25SM). The projection screens are primarily for use in cinemas, but are also used by amusement parks and museums with a need to project large movies.
As you reference in your request, the applicable subheading for the projector screens will be 9010.60.0000, Harmonized Tariff Schedule of the United States (HTSUS), which provides for “Apparatus and equipment for photographic (including cinematographic) laboratories, not specified or included elsewhere in this chapter; negatoscopes; projection screens; parts and accessories thereof: Projection screens.” The general rate of duty will be free.
The screen manufacturing process was described in your written request and supplemented in a teleconference held with the requester on April 16, 2020. The start of the manufacturing process is similar for all four screens.
The Matte White projection screen consists of two raw materials imported into Canada, PVC film from the United States and PVC eyelets (grommets) from Denmark. When the PVC film enters the Canadian factory, it is processed with a perforating machine, which adds thousands of tiny holes to the film. These holes allow sound to travel through the projection screen as many cinemas have the speakers behind the screen. Without the holes, the sound would have a muffled effect. After holes are added, the screen is cut into panels in lengths as per customer specifications. Several panels are cut and then seamed to the proper width. The seaming process uses a high frequency welding machine to activate the molecules in the film. When complete, the seam will not be noticeable for the viewing audience. Finally, the grommets, placed nine inches apart, and border material are added using a high frequency welding machine. After the projection screen is completed, it is packaged for shipping to the end customer.
For the other three screens, the manufacturing process is similar to the Matte White screen, except that specialized coatings are added. The additives, pigments and flakes, change the dynamics of how the movies are viewed. For example, the coating on the 3D Silver 2.5 gain projection screen provides the ability to view three-dimensional images. This projection screen has the following raw materials: PVC film (United States), PVC eyelets (Denmark), resin (United States), additives (United States and United Kingdom), coloring pigments (United States), pigments (United States and the United Kingdom), solvents (United States), and water (Canada). The ingredients are mixed and sprayed onto the screens in the Canadian manufacturing facility. The facility contains specialized paint sprayers designed specifically for the coating process. Once dry, the screens are packaged for shipping to the end customer.
The High White 2.0 screen is produced similarly to the 3D Silver 2.5 gain projection screen, however, this screen has the following raw materials: PVC film (United States), PVC eyelets (Denmark), resin (United States), additives (United States and United Kingdom), coloring pigments (United States and United Kingdom), solvents (United States), water (Canada), flakes (United States), clear (United States) and reducer (United States).
Similarly, the White 1.8 Gains projection screen raw materials are: PVC film (United States), PVC eyelets (Denmark), resin (United States), additives (United States and United Kingdom), coloring pigments (United States and Germany), solvents (United States), and water (Canada).
With regard to country of origin marking of the projection screens, Section 304, Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin (or its container) imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly and permanently as the nature of the article (or its container) will permit, in such a manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article. The regulations implementing the requirements and exception to 19 U.S.C. § 1304 are set forth in Part 134, Customs and Border Protection Regulations (19 C.F.R. Part 134). 19 C.F.R. § 134.1(b) provides as follows: Country of origin means the country of manufacture, production, or growth of any article of foreign origin entering the United States. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the “country of origin” within the meaning of this part; however, for a good of a NAFTA country, the NAFTA Marking Rules will determine the country of origin. Since Canada is a NAFTA country, the NAFTA Marking Rules must be applied in determining the country of origin for purposes of marking. Part 102, Customs and Border Protection Regulations (19 C.F.R. Part 102), sets forth the NAFTA Marking Rules. Section 102.11 provides a required hierarchy for determining the country of origin of a good for marking purposes. See 19 C.F.R. § 102.11. Applied in sequential order, the required hierarchy establishes that the country of origin of a good is the country in which: (a)(1) The good is wholly obtained or produced; (a)(2) The good is produced exclusively from domestic materials; or (a)(3) Each foreign material incorporated in that good undergoes an applicable change in tariff classification set out in Section 102.20 and satisfies any other applicable requirements of that section, and all other applicable requirements of these rules are satisfied.
Sections 102.11(a)(1) and 102.11(a)(2) do not apply to the facts presented in this case because the projection screens are neither wholly obtained nor produced exclusively from “domestic” materials. Because the analysis of sections 102.11(a)(1) and 102.11(a)(2) does not yield a country of origin determination, we look to section 102.11(a)(3). “Foreign material” is defined in 19 C.F.R. § 102.1(e) as “a material whose country of origin as determined under these rules is not the same country as the country in which the good is produced.” The applicable rule for subheading 9010.60.0000, HTSUS, in section 102.20 requires a change to subheading 9010.60 from any other subheading.
All of the components used in the production of the subject projection screens are imported into Canada, with the exception of water, and are therefore designated as foreign material. After a thorough review of the bills of materials for each of the projection screens, all of the components, which have undergone a cutting process, a perforation process, and a welding process in Canada, are classifiable outside of heading 9010, HTSUS.
Thus for purposes of marking, the foreign components undergo the requisite change in heading and the country of origin of the projection screens, models High White 2.0 (3DHW 2.0 SM), Matte White 1.0 Gain (N10SM), White 1.8 Gains (N18SM) and 3D Silver 2.5 Gain (3D25SM) is Canada.
Turning to your request for NAFTA status, General Note 12(b), HTSUS, sets forth the criteria for determining whether a good is originating under the NAFTA. General Note 12(b), HTSUS, (19 U.S.C. § 1202) states, in pertinent part: For the purposes of this note, goods imported into the customs territory of the United States are eligible for the tariff treatment and quantitative limitations set forth in the tariff schedule as “goods originating in the territory of a NAFTA party” only if-- (i) they are goods wholly obtained or produced entirely in the territory of Canada, Mexico and/or the United States; or (ii) they have been transformed in the territory of Canada, Mexico and/or the United States so that-- (A) except as provided in subdivision (f) of this note, each of the non-originating materials used in the production of such goods undergoes a change in tariff classification described in subdivisions (r), (s) and (t) of this note or the rules set forth therein, or (B) the goods otherwise satisfy the applicable requirements of subdivisions (r), (s) and (t) where no change in tariff classification is required, and the goods satisfy all other requirements of this note; or (iii) they are goods produced entirely in the territory of Canada, Mexico and/or the United States exclusively from originating materials; or (iv) they are produced entirely in the territory of Canada, Mexico and/or the United States but one or more of the nonoriginating materials falling under provisions for “parts” and used in the production of such goods does not undergo a change in tariff classification because-- (A) the goods were imported into the territory of Canada, Mexico and/or the United States in unassembled or disassembled form but were classified as assembled goods pursuant to general rule of interpretation 2(a), or (B) the tariff headings for such goods provide for and specifically describe both the goods themselves and their parts and is not further divided into subheadings, or the subheadings for such goods provide for and specifically describe both the goods themselves and their parts, provided that such goods do not fall under chapters 61 through 63, inclusive, of the tariff schedule, and provided further that the regional value content of such goods, determined in accordance with subdivision (c) of this note, is not less than 60 percent where the transaction value method is used, or is not less than 50 percent where the net cost method is used, and such goods satisfy all other applicable provisions of this note. With respect to General Note 12(b)(ii)(A), the applicable tariff shift rule under General Note 12(t) Chapter 90 states: (A) A change to subheading 9010.60 from any other heading, or
(B) A change to subheading 9010.60 from any other subheading, provided there is a regional value content of not less than:
(1) 35 percent when the build-up method is used, or
(2) 45 percent when the build-down method is used.
In regards to whether the tariff shift is met in the applicable rule for subheading 9010.60, because the raw materials imported into Canada are classifiable in headings of Chapters 29, 32, 34, 38, and 39, HTSUS, this rule is met. Most notably the PVC film, imported into Canada under Chapter 39, is further processed in Canada to transform it from a PVC film to a projection screen.
Based on the facts provided, the projection screens, models High White 2.0 (3DHW 2.0 SM), Matte White 1.0 Gain (N10SM), White 1.8 Gains (N18SM) and 3D Silver 2.5 Gain (3D25SM) described above qualify for NAFTA preferential duty treatment because it meets the requirements of HTSUS General Note 12(b)(ii)(A). The merchandise will therefore be entitled to a Free rate of duty under the NAFTA.
This ruling letter has not addressed the actual Regional Value Content (RVC) of the subject goods. If you desire a ruling regarding the RVC of your goods, provide the information noted in Section 181.93(b) of the Customs Regulations (19 CFR 181.93(b)), to U.S. Customs and Border Protection, Regulations and Rulings, 799 9th Street N.W. 7th Floor, Washington, DC 20229-1177, along with a copy of this letter.
The holding set forth above applies only to the specific factual situation and merchandise description as identified in the ruling request. This position is clearly set forth in Title 19, Code of Federal Regulations (CFR), Section 177.9(b)(1). This section states that a ruling letter is issued on the assumption that all of the information furnished in the ruling letter, whether directly, by reference, or by implication, is accurate and complete in every material respect. In the event that the facts are modified in any way, or if the goods do not conform to these facts at time of importation, you should bring this to the attention of U.S. Customs and Border Protection (CBP) and submit a request for a new ruling in accordance with 19 CFR 177.2. You should also be aware that the material facts described in the foregoing ruling may be subject to periodic verification by CBP.
Duty rates are provided for your convenience and are subject to change. The text of the most recent HTSUS and the accompanying duty rates are provided on the World Wide Web at https://hts.usitc.gov/current.
This ruling is being issued under the provisions of Part 181 of the Customs Regulations (19 CFR Part 181).
A copy of the ruling or the control number indicated above should be provided with the entry documents filed at the time this merchandise is imported. If you have any questions regarding the ruling, contact National Import Specialist Jason Christie at [email protected].
Sincerely,
Steven A. Mack
Director
National Commodity Specialist Division